Big banks were the top decliners, a day after Moody's lowered debt ratings for large lenders.
Shares of Citigroup Inc and Morgan Stanley hit a 52-week low at the market's open. Citigroup fell more than 4 percent to $24.25 and Morgan Stanley dipped more than 6 percent to $12.99.
The Select Sector Financial Sector SPDR funds was off more than 3 percent, also a 52-week low.
"A lot of people were hoping for the Fed to say we are close to recession but not really in it and were expecting an aggressive action out of the Fed. The market didn't get this," said James Dailey, portfolio manager of TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.
The market's mood has turned decidedly negative since the Fed statement on Wednesday, which detailed additional stimulus measures but also focused on the weak economy.
Investors are taking a more pessimistic view, and they question the ability of euro zone governments to control the sovereign debt crisis and reverse sluggish growth.
The Dow Jones industrial average fell 355.86 points, or 3.20 percent, at 10,768.98. The Standard & Poor's 500 Index was down 38.51 points, or 3.30 percent, at 1,128.25. The Nasdaq Composite Index was down 79.97 points, or 3.15 percent, at 2,458.22.